7 Things You Need To Know Before Incorporating a Company
Incorporating establishes a business that is legally separate from its proprietors. Corporations can do a lot of things that individuals can do, including acquiring property, signing contracts, having bank accounts, and filing lawsuits.
If your business is small, you might wonder whether an incorporation service is essential.
The common reasons for incorporating a business are to restrict your personal liability for business obligations. This can be a smart idea if you have lots of outside contracts.
Also, because a company’s proprietorship is contained in shares that are easily transferred from one owner to another, a corporation is a good decision if you’re planning to sell the business or draw in outside investors. What’s more, a sole proprietorship or general partnership, a corporation continues to exist beyond its founders’ lives.
However, it costs money to set up and dissolve an organization, and corporations have extra recordkeeping and annual reporting requirements that sole proprietorships and partners don’t. If your business is small and just a startup, those additional obligations can outweigh the benefits of incorporating.
If you’ve considered the pros and cons and decided that you want to incorporate, you’ll need to prepare articles of incorporation and file them with the state. Each state has its own guidelines regarding how to incorporate, but here is some essential information you’ll require:
Rules about business names vary from one state to another, but most include these basic guidelines:
- Your business name should not be the same as the name of some other business entity registered to do business in your state. There are many online search tools that allow you to check for similar business names.
- You are restricted from using specific words in your name, like obscene words or the word “bank,” unless you are a financial institution.
- Your name should end with “incorporated,” “company,” “enterprise” or an abbreviation of one of those words.
Your business address is simply the place where your business gets mail. It is generally acceptable to use a P.O. Box as a business address.
Names of Decision-Makers
Your must list the names of a few of your decision-makers in the articles of incorporation. You may need to identify two types of decision makers: incorporators and directors.
In all states, the articles of incorporation should list the names of at least one incorporator. An incorporator is an individual liable for planning, signing, and filling out the articles of incorporation. Incorporators’ duties typically end once the articles are filed and a board of directors is chosen.
A few states also require you to list the corporation’s board of directors. The board of directors is responsible for setting corporate objectives and policies and naming officials to lead the corporation’s everyday business. In a small business, the board of directors generally consists of business owners, but directors don’t need to own shares in the business. Each state’s laws set a minimum number of directors—typically one to three.
Names of Business Owners
The proprietors of a corporation are known as “share holders,” and they own shares of stock in the business. In your articles of incorporation, you’ll typically have to specify the number of shares of stock your company is authorised to issue. Still, you have no need to list the names of the shareholders.
Your internal corporate records should include your investors’ names and the shares of stock issued to every one of them.
Physical Address in the State of Formation
The articles of incorporation must specify a street address inside the state and an individual situated at that address who can receive legal documents, notification, and lawsuits on behalf of the organization. The address is sometimes referred to as a “registered office,” and the person at the location is referred to as a “registered agent” or “legal agent.”
In many states, your business location can fill in as the registered office, and a corporation or anybody over 18 years of age can be the registered specialist. However, if you don’t have an office in the state where you incorporate or prefer to have someone else act as an agent for you, you can employ an expert registered agent.
Once you’ve gathered this basic data, you’re ready to start shaping your corporation. In addition to the articles of incorporation, you’ll need bylaws that will guide the way in which your corporation operates.
Rules of Incorporation
Before incorporation, it’s important to understand how becoming an organisation will change your business. Start by learning the roles and responsibilities of directors, shareholders, and officials. Think carefully regarding who will become a part of the corporation and what they’ll be expected to contribute on a daily, weekly, monthly, or yearly basis.
When a business incorporates, it needs to keep up with specific legal documentation. Take note of the necessities for filling out articles of incorporation and bylaws, and amendments to the articles or bylaws. Corporations should also file annual financial reports and tax returns. Any changes to the officers or directors of a corporation should also be reported and filed with US incorporation services.
Budget for Incorporating
Before incorporating, set aside money to take care of the expenses before incorporating. You may choose to incorporate on your own online to save the legal fees a legal advisor may charge. You’ll always have to pay the government fees required in your jurisdiction, just like the cost of a business name search and registration.
Also, with Entelyglobal company incorporation services, we have a great offer to save you more money.
Consider these points for a few moments before proceeding to the next step in the incorporation process: creating articles of incorporation and bylaws. Doing so can save you time and money, giving you a greater amount of both to help your new business get off the ground.
Are you ready to start your own business? Entelyglobal has helped many entrepreneurs hit the ground running quickly and affordably. If you have questions about how to register or incorporate your business, we are ready to help you.